Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies are unlikely to differ significantly from those of President Joe Biden if she becomes the Democratic presidential nominee. This comes after Biden announced he would withdraw from the race amid increasing pressure following a lackluster debate performance against former President Donald Trump.
In his statement, Biden endorsed Harris, who has expressed her intent to continue her campaign. She has garnered support from prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. Despite this change in leadership, analysts at Goldman believe that the Democratic fiscal and trade policy agenda will not see substantial alterations with Harris at the helm.
Goldman Sachs assessed that the odds of the Democrats securing the White House have increased slightly but remain just below 40%. They noted that next year’s fiscal focus will likely center on taxes, as the personal income tax cuts from the Tax Cut and Jobs Act are set to expire at the end of 2025. The upcoming election will play a crucial role in determining the future of these tax provisions.
The firm provided specific forecasts regarding fiscal policy under a potential Biden victory, predicting a tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current range of 35% to 37%. Additionally, Biden’s proposed corporate tax rate is expected to rise to 28% from the existing 21%, although Goldman expressed skepticism about this figure being approved by Congress, suggesting a rate around 25% is more feasible. Meanwhile, Trump has promised to reduce the corporate tax rate to 20%.
Biden’s proposition includes a Social Security and Medicare tax increase on incomes above $400,000, raising it from 3.8% to 5%. Should Harris become the nominee, speculation about potential running mates includes governors such as Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, and Arizona Senator Mark Kelly.